Have Your Cake and Eat It, Too: How LogiSense And Usage-Based Billing Are Empowering Our Cloudy Future

Usage-based billing, or metering of services so that users only pay for what they actually use, is one of the five essential characteristics of Cloud Computing, as defined by NIST: 

Measured Service. Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g., storage, processing, bandwidth, and active user accounts). Resource usage can be monitored, controlled, and reported, providing transparency for both the provider and consumer of the utilized service.

LogiSense offers IP billing software that enables ISPs, telcos, broadband providers, and cloud computing providers to accurately measure and bill for just the services their clients use.  LogiSense’s EngageIP solution helps clients rapidly launch rich services on the market, deliver flexibility, increase ROI and reduce the cost of ownership of their technology offering while managing the revenues generated, captured, and collected. 

We in the IT Channel aren’t the target client for LogiSense.  Some of our larger partners, however, like ISPs and telcos, are.  Yet LogiSense is important and relevant to us just the same, because companies like LogiSense are shaping the future of the Cloud Era by supporting the cloud computing model from the very highest level.  Not only are they influencing the direction of businesses that will be offering major cloud services today and tomorrow, but they’re guiding and directing the cloud consumer’s experience as well.  What consumers expect from cloud services has a lot to do with what they are billed for, and how they are billed for it.  What consumers expect from cloud services also affects us directly, the IT service providers who are working hands-on in those accounts every day.  LogiSense could be our best friend or our worst enemy here in the channel. 

As I discovered all of this, I quickly became very interested in where these guys might be coming from philosophically.  I got the opportunity to have a conversation with Flavio Gomes, the CEO of LogiSense, just the other day.  Originally I’d engaged him for a conversation about Net Neutrality issues, as the software that LogiSense sells enables ISPs to track usage against limits and do all those things that are so abhorrent to the Net Neutrality lobby, but our conversation quickly veered in an unexpected direction.

Mr. Gomes holds the position that usage-based billing aligns the interests of all parties in the Cloud Era.  Everybody in the ecosystem benefits from the model, the way he sees it. 

But how? 

First of all, this is where my terminology and Mr. Gomes’ start to diverge.  He uses very ISP and telco-ish terms, like Operator and Content Provider, so I’m going to try to translate all of this into IT Channel language for us. 

First things first:  in the usage-based billing model the consumer, of course, only pays for exactly the amount of bandwidth or computing power or time that they actually use.  This provides a lot of cost benefits to that consumer, especially in a recession economy.  The provider is able to track what is used very accurately, which not only helps with capacity planning and the like, but reduces the one-offs or freebies that impede the profitability of their services.  Again, being able to keep track of every last billable minute is especially useful in a recession economy. 

A lot of us are comfortable paying monthly flat rates for services, just wanting the reassurance that we have enough available in case we need it, not minding the fact that we might end up paying for something we didn’t use.  Research proves that consumers tend to overpay when they choose in this manner.  The old saying “your eyes are bigger than your stomach” applies to more than food. 

In comes The Cloud with its Usage-based billing to save the day.  What’s more efficient than paying for exactly what you used?  But here’s the thing:  we in the IT Channel haven’t received the cloudy usage-based billing model very well.  We like the things the way they are.  And if our clients like things the way they are too, why would we support a usage-based model that looks like it will take money out of our pockets? 

While I spoke with Mr. Gomes, it occurred to me that this apparent conflict of interest might be nothing but an illusion.  We can have our cake and eat it too in the Cloud Era.  We can maintain that alignment we have with our clients today while adding another layer on top of it, making the net gain even greater for everyone. 

In the early days of Managed Services, we enticed our clients to try the new services with promises of fewer issues and faster problem resolutions.  They basically got more service for less money, thanks to the technology tools (like RMM software) that were available to us.  The way we provided value didn’t diminish, it just changed.  Instead of “fixing computers” it was “keeping businesses up and running.”  Some challenges came with it, as we had to learn to be more proactive, to show what issues we were preventing as well as those we were addressing, and how to become a consulting resource that helped the client business choose, deploy, and manage the right technology for their needs.  But we did it.  Well, most of us anyway. 

Today, usage-based billing for cloud services puts us in much the same position.  We can entice our clients to try cloud services with promises of fewer issues, improved availability, reduced costs, etc.  Just as in the past, the client basically gets more for less, thanks to new technology tools.  The way we provide value won’t diminish when our clients scrap their old Exchange server and move into a hosted environment, but it will change.   We’re still primarily interested in “keeping the business up and running” but we will have to do it in a new way. 

When clients are only billed for what they use, issues of what is used, how it’s used, and why it’s used come to the forefront.  The People and Processes become more important than the Technology.  Clients will require support from a trusted expert to help them evaluate and make adjustments over time. 

We can offer our clients the benefits of usage-based billing for cloud services without cutting off our own revenue streams, but we’ll have to learn how to charge for consulting time to di it, something that many VARs and MSPs struggle with.  If we can master that, we’ll be able to have our cake and eat it too in the Cloud Era.  All thanks to companies like LogiSense and people like Flavio Gomes.